Paul Pester added that competition concerns will not be addressed by a £750m state fund for challenger banks.

He said: “Clearly we’ve been successful in creating TSB out of Lloyds and creating a new challenger bank. If that’s not to happen with Williams & Glyn through the creation of an independent bank, what’s important is that we still get the same outcome, which is more competition.”

The Treasury said RBS “must deliver on its remaining state-aid commitments”.